Print

Email story

Comment

Email editor

Air taxi

New service adds on-demand choices for people in a hurry.

By STEVE HUETTEL
Published May 28, 2006

Scott Bohnsack's job selling satellite communications gear to the military takes him places airlines don't fly frequently.

To make a morning meeting at Fort Bragg, N.C., he has to leave Tampa after lunch, cool his heels in Atlanta for 90 minutes and spend the night before in a hotel near the sprawling Army post. The return trip requires waiting nearly four hours in the world's busiest airport or catching a flight that gets him home after midnight.

"The way my company measures my time is how much money I make for them,'' Bohnsack said. "My value is in front of the customer.''

He eagerly awaits what some aviation experts herald as a breakthrough in business travel: tiny jet "air taxis" that will whisk people to out-of-the-way cities without changing planes at a big hub airport. The revolution could begin soon in Florida.

DayJet Inc. of Delray Beach expects to launch on-demand flights among five undisclosed cities in the Sunshine State in the last quarter of this year with its first Eclipse 500 jets.

The company has ordered 239 of the five-seat planes. It plans to add three states within a year and spread throughout the Southeast by 2008.

Chief executive Ed Iacobucci insists a profitable niche exists for air travel that's more convenient than airlines but much cheaper than chartering a jet, which can cost thousands of dollars. Customers will be able to buy one seat and share the jet with other passengers. The cost: $1 to $3 per mile, with the low end comparable to full coach fare on a regional airline.

At a Tallahassee press conference last month, he won applause from locals by saying DayJet would fly direct to Gainesville without their accustomed stop in Atlanta.

"There are thousands of cities like that,'' says Iacobucci, who founded the Fort Lauderdale software company Citrix Systems and was a former leader of the IBM OS/2 software operating system design team. "We're not trying to be a travel solution to everybody. It's a question of the time value of money.''

DayJet must clear financial hurdles to get off the ground. The company has burned through $20-million of the $25-million raised from investors since its start in 2002.

DayJet is trying to raise $135-million, Iacobucci told the magazine Aviation Week & Space Technology last month, including an equity placement he hopes to complete by this summer.

It's a risky bet. Nobody has tried a large-scale air taxi service with small jets, so there are plenty of unknowns.

How big a market exists for premium-priced travel between small cities? Will fussy business travelers balk at flying in a plane with the interior space of a minivan and no bathroom? What about corporate travel policies that require employees fly at the cheapest fare?

Business travel is split between high-rollers in corporate jets and road warriors crammed into airliners, with little opportunity in between, says Richard Aboulafia, an analyst with Teal Group, a Fairfax, Va., aviation research firm.

"There are a couple high-density markets that might stand a chance," he says. "You can attract people, but can you sustain profits? It sounds a little utopian.''

That hasn't discouraged a handful of other startups from trying to get into the business.

Best known is Pogo, founded by Don Burr, the former chief executive of '80s discount carrier People Express, and former American Airlines chairman Robert Crandall. Pogo plans to fly within 500 miles of New York City, targeting professionals earning at least $150,000 a year.

Interest in air taxis is driven by a new category of small, inexpensive planes - called very light jets or microjets - that's just beginning to hit the market.

They have five to eight seats and can fly 400 mph or faster at the same altitudes as airliners. The cheapest cost $1.5-million, compared with $2.4-million for the least-expensive corporate jet.

One key feature: Microjets can land on short runways, opening 5,000 general-aviation airports in the United States to commercial passenger flights.

The Federal Aviation Administration projects 100 microjets would be operating by the end of 2006 and grow by 400 to 500 a year through 2017. That includes air taxis and microjets owned by private pilots, wealthy people and companies.

* * *

Iacobucci learned to hate regular airline travel as his software company, Citrix, expanded sales globally in the late '90s.

Flying to meet with partners, investors and the media demanded so much time from home that he and his wife bought a corporate jet, then another. "It instantly gave me back a big chunk of time,'' he says.

After leaving Citrix amid a company shakeup in 2000, Iacobucci was looking for a new business. The light went on during a seminar on the emerging air taxi market by a NASA official, a journalist and a former Microsoft executive who was developing the Eclipse 500.

Iacobucci recognized the key was solving "a logistics and mathematical problem'' - how to move jets the most efficient way to pick up passengers at various times in scattered cities.

It's called an optimization problem. A simple example is a mom in a minivan who has to pick up one kid at school, move another from baseball practice, get the dry cleaning and shop for groceries. She calculates the quickest route to get everything done.

DayJet needed to orchestrate the movements of scores of planes among dozens of cities, constantly adjusting schedules as new reservations flowed in, says Brad Noe, DayJet's vice president of engineering.

"The problem set is literally millions and millions of possible ways to match aircraft with passengers,'' he says. "The key is to pick one optimal or near-optimal one. As you (increase aircraft) from 15 to 20 to 100, it becomes impossible to do with human beings.''

Iacobucci launched the company in 2002 under the name Jetson Systems, a nod to the '60s TV cartoon in which characters flew around in their own little spaceships. Techies worked on projects with code names like Rosie and Astro.

While one team of engineers worked on scheduling and reservations, another crunched volumes of data on how many people travel by air and car between cities. They built forecasting models to help DayJet decide where to fly and how much to charge.

In focus groups, business travelers in the Southeast were asked about how much they would pay and if they had any qualms about the tiny jet.

"Most if them said, 'It's smaller than I'd like, but it beats all the alternatives,' " Iacobucci says. Only one of 44 participants who sat in a model of the Eclipse 500 cabin wouldn't fly in it, he says.

DayJet expects to attract a wide swath of professionals such as lawyers, auditors and trainers who earn $75,000 to $100,00 a year. They might need to fit meetings with clients in different cities into a single day or just want to get home for a kid's basketball game.

Aviation consultant Gerald Bernstein agrees there's potential for air taxis to thrive in small and mid-sized cities with limited airline service. Greensboro, N.C., has 15 significant business destinations within 500 miles but without direct flights. Fares are as high as $900.

"There are a lot of targets sitting out there,'' says Bernstein, vice president of the Velocity Group.

Airlines, however, are skeptical that air taxis will fly mostly between small markets.

They warn that a growing fleet of microjets could clog crowded skies over New York, Chicago and South Florida.

"The market will dictate what they do,'' says Basil Barimo, vice president of operations and safety at the Air Transport Association, a trade group for major airlines.

"They'll have to find enough of those people to make the business model work.''

DayJet won't need airline-sized numbers to be successful, Iacobucci says. The concept will fly if DayJet can capture 1.5 percent of business trips in the Southeast made in cars and airliners. That comes to about 3,000 passengers a day.

"It could be successful or it could be wildly successful,'' Iacobucci says.

"In the worst case it will (pay off) like a utility. In the best case, it will be like Microsoft.''

Researcher Angie Drobnic Holan contributed to this report. Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

[Last modified May 28, 2006, 07:03:27]